Correlation Between QPR Software and Nightingale Health

Can any of the company-specific risk be diversified away by investing in both QPR Software and Nightingale Health at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining QPR Software and Nightingale Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between QPR Software Oyj and Nightingale Health Oyj, you can compare the effects of market volatilities on QPR Software and Nightingale Health and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in QPR Software with a short position of Nightingale Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of QPR Software and Nightingale Health.

Diversification Opportunities for QPR Software and Nightingale Health

0.14

Correlation Coefficient

QPR Software  Nightingale Health

Average diversification

The 3 months correlation between QPR and Nightingale is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding QPR Software Oyj and Nightingale Health Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nightingale Health Oyj and QPR Software is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on QPR Software Oyj are associated (or correlated) with Nightingale Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nightingale Health Oyj has no effect on the direction of QPR Software i.e., QPR Software and Nightingale Health go up and down completely randomly.

Pair Corralation between QPR Software and Nightingale Health

Assuming the 90 days trading horizon QPR Software Oyj is expected to generate 0.67 times more return on investment than Nightingale Health. However, QPR Software Oyj is 1.49 times less risky than Nightingale Health. It trades about 0.07 of its potential returns per unit of risk. Nightingale Health Oyj is currently generating about -0.02 per unit of risk. If you would invest  59.00  in QPR Software Oyj on September 16, 2024 and sell it today you would earn a total of  7.00  from holding QPR Software Oyj or generate 11.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

QPR Software Oyj  vs.  Nightingale Health Oyj

QPR Software Oyj

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in QPR Software Oyj are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, QPR Software demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Nightingale Health Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nightingale Health Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nightingale Health is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with QPR Software and Nightingale Health

The main advantage of trading using opposite QPR Software and Nightingale Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QPR Software position performs unexpectedly, Nightingale Health can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nightingale Health will offset losses from the drop in Nightingale Health's long position.

The idea behind QPR Software Oyj and Nightingale Health Oyj pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.